The Cost of Energy Dependence

A Commentary by Lee H. Hamilton, President and Director of the Woodrow Wilson International Center for Scholars

Mar 23, 2006

Thirty years ago, I gave a speech calling for America to become less dependent upon foreign sources of energy. I was no pioneer, nor was I alone in my concern – over the years, Americans have been consistently aware of the cost of what President Bush called our addiction to oil. Yet more than three decades later, we are even more dependent on foreign energy.

America's rising dependence on foreign sources of oil and gas is one of our greatest policy failures. This has been principally a failure of political will – through multiple administrations and sessions of Congress, both political parties have proven unwilling to invest the resources or make the sacrifices necessary to address a vulnerability that has far-reaching consequences on the daily lives of the American people.

Just what are the costs of our addiction? To begin with, our economy is dangerously vulnerable because of the necessity of oil and gas to heat our homes, power some industry, and – most importantly – keep our vehicles moving. Because of this dependency, we suffer economic shocks when our access to oil and gas is threatened: the OPEC embargo, the Iranian revolution, Iraq's invasion of Kuwait, the war in Iraq, Hurricane Katrina, and militia attacks in southern Nigeria are just a handful of incidents that have driven up oil and gas prices, slowing growth and making life harder for millions of Americans.

This dependency is a huge constraint on our foreign policy. Because most of the world's known energy reserves are in the Persian Gulf, every recent President has called this region vital to American interests, and we place an inordinate amount of attention – and spend vast amounts of resources – trying to keep the region stable. Above all, we are tied to a rigid trade-off with the Saudi royal family that is not always to our advantage: we guarantee their security, they guarantee affordable prices for oil.

This has several unintended consequences. We are open to the charge of hypocrisy, as we call for democracy yet support an authoritarian regime in Saudi Arabia. Western money that floods the Gulf has helped to further Islamist causes, notably the spread of radical Islamic schools and, in some cases, terrorism. Oil money provided a seed for nuclear programs in Iraq and Iran. Meanwhile, our ability to deal with threatening yet energy-rich states like Iran is curtailed because of their ability to drive up the price of oil, and leaders in Venezuela or even Russia have some leverage over the United States. Our pursuit of other goals – for instance, Israeli-Palestinian peace – is constrained because of the need to maintain access to oil.

And the foreign policy challenges posed by energy dependence will only grow. As countries like India and China develop a need for more and more oil and gas, the global demand for energy will increasingly outpace the available supply. This could lead to increased competition for resources, driving the U.S. further into unstable regions like West Africa and Central Asia. The worst-case scenario is that the great power competition for energy will become violent.

Yet the greatest long-term threat posed by our current energy dependence may be environmental. The burning of fossil fuels – mainly oil and gas – accounts for much of the emissions that pollute our atmosphere. Without increased energy efficiency and more renewable sources of energy, global climate change could prompt irreversible damage to our environment – changing weather patterns, new diseases, and eroded coastlines.

Change will not be easy. We need new fuels, vehicles, and standards of efficiency, all of which demand more resources for research and development of new technologies, and a greater willingness to change entrenched ways of doing things. But imagine a world in which the U.S. was less dependent on foreign oil and gas – our economy would be less vulnerable to sporadic shocks, our foreign policy would be free from an enormous albatross, and our environment would be rescued from its gravest danger. Meanwhile, the shift to new technologies could prompt new modes of job creation and economic growth.

The way we, as a society, use energy is at the nexus of our national, economic and environmental security. By choosing not to become less dependent on foreign oil and gas, we have chosen to live with an intolerable burden: though it enables today's politicians to avoid tough choices, this choice mortgages our future. But if we choose to start freeing ourselves from this burden, we can leave our grandchildren a safer, prosperous, and cleaner country.

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